The Bodo Community & Ors v Shell Petroleum Development Company of Nigeria Ltd

Issue-based costs orders should be made only where the circumstances require them. The court should begin with the general rule that costs follow the event, then consider the parties’ overall success and whether a proportionate order can fairly recognise success on particular issues. The practical cost and complexity of detailed assessment are important considerations. Where an issue is deferred rather than finally decided, the costs attributable to it may appropriately be costs in the case. A proportionate allocation may reflect the relative importance of the issues, common costs, abandoned arguments and the extent to which work remains useful.

The judgment concerned the costs of a preliminary-issues exercise in claims by the Bodo Community and individual claimants against Shell. The court had previously determined eight preliminary issues, including the exclusivity of the Oil Pipelines Act 1990 remedy, liability for spills caused by illegal bunkering, recoverability of different heads of loss, jurisdiction, public nuisance and interest.

The parties disputed their relative success and whether costs should be allocated issue by issue. The court therefore had to determine the appropriate costs order, including the effect of a deferred jurisdiction issue and the parties’ partial or abandoned arguments.

1. An issue-based costs order was inappropriate. It would complicate the detailed assessment and materially increase costs. The general rule that costs follow the event remained the appropriate starting point, with proportionality used where necessary to reflect limited success.

2. The court treated Shell as the substantive and substantial winner on Issue 1. The fact that Shell had failed on its separate argument based on the Interpretation Act did not justify treating the claimants as successful on that issue, because Shell’s wider statutory argument had been clearly pleaded and advanced.

3. Issue 2 was effectively a draw. Although the issue had nominally been answered in Shell’s favour, the answer concerned a point not genuinely in dispute. The parties had otherwise achieved mixed results on the meaning and scope of the statutory duty to protect pipelines.

4. Issue 6 was not finally determined. It was inappropriate and unfair to decide at that stage whether section 30 of the Civil Jurisdiction and Judgments Act 1982 applied. The work undertaken on the competing arguments remained potentially useful and was not wholly wasted.

5. Applying the practical guidance in Dyson Technology Ltd v Strutt [2007] EWHC 1756 (Ch) and Multiplex Constructions (UK) Ltd v Cleveland Bridge UK Ltd [2008] EWHC 2280 (TCC), the court ordered that 10% of the costs of and occasioned by the preliminary issues be costs in the case. Of the remaining 90%, the claimants were to pay 75% of Shell’s costs and all of their own costs.

6. The question of payment on account was deferred by agreement. The court indicated that production of the after-the-event insurance policy would not generally be ordered at that stage, although it might become necessary to support an argument based on the insurance cover.